Who knew that chromite mining in the Ring of Fire region could one day be a major economic driver for Ontario?
“Ring of Fire is one of the most promising mineral development opportunities in Ontario in almost a century,’’ said George Ross, a deputy minister in Ontario’s Northern Development and Mines Ministry, during a speech to a mining conference in Toronto this week.
"Current estimates suggest multi-generational potential for chromite production as well as significant production for nickel, copper and platinum," Ross said.
Chromite mined from the Ring of Fire, a remote part of northern Ontario, is expected to feed the province’s massive mining services and supply chain for many decades to come.
Extracted and then concentrated at source, it must be shipped by road or rail to processing facilities, likely in Sudbury, where it will be turned into Ferrochrome, a critical ingredient used to manufacture stainless steel.
If it all goes ahead, U.S. giant Cliffs Natural Resources (NYSE: CLF, Stock Forum) could easily invest up to $3.3 billion in mining, transportation and processing facilities, producing 2.3 million tonnes of chromium in concentrates from its Black Thor project.
On top of that is the $609 million that Noront Resources Ltd. (TSX: V.NOT, Stock Forum) could spend to develop a nearby nickel-copper-PGM mine known as Eagle’s Nest.
“The province is committed to seeing this going forward,’’ said Ross, while speaking to a packed Prospectors and Developers Association of Canada audience that included representatives of communities who expect to benefit from the economic spinoffs, including 5,000 new jobs.
Thunder Bay (the nearest city to the proposed mines) and the Fort William First Nation have hired SNC-Lavalin Group Inc. (TSX: T.SNC, Stock Forum) to determine what they need to do to prepare.
Also watching developments are members of the Webequie First Nation (population 840), which wants to be involved in decisions related to land, resources and the environment.
“This project may be in the middle of nowhere, but it is actually in my back yard,’’ said Elsie MacDonald, a band councillor with the Webequie.
But the high level of interest does not appear to be reflected in the share valuations of Noront and other Ring of Fire players, including McDonald Mines Exploration Ltd. (TSX: V.BMK, Stock Forum, KWG Resources Ltd. (TSX: V.KWG, Stock Forum), Fancamp Exploration Ltd. (TSX: V.FNC, Stock Forum), Bold Ventures Inc. (TSX: V.BOL, Stock Forum) and Probe Mines Ltd. (TSX: V.PRB, Stock Forum).
Observers said this is because of the uncertainties associated with mining in a region that is so far away from crucial processing and transportation infrastructure. The nearest railway is located 285 kilometres further south in Nakina, Ont.
“Companies in the region might see some movement as soon as there is some clarity as to what the transportation route is going to be,’’ said Mark Parrish, a spokesman for KWG, which traded at 6 cents this week, leaving the company with a market cap of $40 million, based on 667.2 million shares outstanding.
He was referring to the fact that a railway must be built to allow concentrates produced in the Ring of Fire to be shipped to markets. “The railway is going to be the most difficult part of the project in terms of construction,’’ said Ken Pavlich, vice-president, global operations with Cliffs.
Parrish said that in his view, Cliffs is contributing to the uncertainty by choosing not to focus on its Big Daddy project, which it got by acquiring Spider Resources Inc. in October 2010 and which is 30%-owned by KWG. It has chosen instead to look at the feasibility of mining the nearby Black Thor discovery, which is larger but lower grade.
This has raised the question as to whether Big Daddy will be mined in the near future or placed on the back burner, Parrish said.
Rather than wait, KWG has elected to fund exploration on another nearby chromite find, known as Black Horse.
After striking a deal with Bold Ventures and Fancamp Exploration, KWG can earn a 80% stake in Black Horse and will launch into a $3 million drill program next month.
Pavlich said Cliffs is looking forward to the day when an arctic airstrip is complete. “It will be useful to everyone who is exploring in the area,’’ he said.